Ministry of Land, Infrastructure and Transport Conducts Actual Transaction Investigation on Suspected Speculative Trades
[Asia Economy Reporter Na Ye-eun] The government is set to detect speculative real estate transactions by foreigners in South Korea and will launch its first joint investigative project with related ministries.
On the 23rd, the Ministry of Land, Infrastructure and Transport announced that, together with related agencies such as the Ministry of Justice, the National Tax Service, and the Korea Customs Service, it will conduct actual transaction investigations on 1,145 cases suspected of speculative transactions, including up-down contracts, name trusts, and illegal gifts.
According to the Ministry of Land, Infrastructure and Transport, the number of housing transactions by foreigners accounts for less than 1% of the total but has been increasing every year. The number of transactions rose significantly during the recent housing price surge, from 6,676 cases in 2019 to 8,756 in 2020 and 8,186 in 2021.
Additionally, according to the "Foreigners' Real Estate Purchase Status Data" submitted to Jeong Woo-taek, a member of the National Assembly’s Industry, Trade, Energy, Small and Medium Enterprises Committee from the legislative research office, the total number of buildings such as houses purchased by Chinese nationals last year reached 6,640 units.
Gyeonggi-do had the highest number among the 17 provinces and cities nationwide, with 2,659 cases. The total number of buildings purchased by foreigners in Gyeonggi-do last year was 3,404, with Chinese purchases accounting for 78.1%.
The number of purchases by Americans was 408, and other countries accounted for 337 cases.
There were cases where a single foreigner purchased as many as 45 houses, and signs of abnormalities were detected, such as purchases by minors (the youngest being 8 years old).
According to the office of Democratic Party lawmaker So Byung-hoon, a Chinese national A (33) purchased a 407.96㎡ (123-pyeong) unit in Tower Palace, Dogok-dong, Gangnam-gu, Seoul, for 8.9 billion KRW in March last year. A also bought the lower and upper floors for 5.5 billion KRW and 3.4 billion KRW, respectively.
A financed the entire 8.9 billion KRW purchase amount through a bank loan, but there was no record of a mortgage registration on Tower Palace in the real estate registry. This means A did not use a housing mortgage loan, which is a loan secured by the house.
For domestic residents, such a transaction is impossible with a full loan. Since 2019, housing mortgage loans have been prohibited for purchases of houses worth more than 1.5 billion KRW in speculative or overheated speculation areas.
A is known to have procured the 8.9 billion KRW purchase funds from a foreign bank abroad. When foreigners obtain loans from foreign banks abroad to purchase domestic real estate, domestic laws do not apply.
As such, management of real estate speculation by some foreigners, who have relatively more freedom than domestic residents in acquiring real estate, has not been properly enforced, raising concerns about reverse discrimination against domestic residents.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
